Abstract:-

Using firm and household-level data from India, we establish a positive association between relative female employment and firm size. We find that the proportion of female workers is higher in firms with a larger number of total employees (elasticity of 0.22) and output (elasticity of 0.04), even after controlling for firm, industry and occupation level unobservables. We further show that higher benefits and amenities offered by larger firms, like maternity benefits and paid leave, which are likely to be valued more by female workers, with no accompanying increase in the gender wage gap is a plausible mechanism behind our findings. We then exploit a natural experiment in the amendment of labor laws across the Indian states, which increased the firm size thresholds for the applicability of regulatory compliances. Using a difference-in-difference estimation, we find an increase in the proportion of female workers by approximately 4.2% in treated vs. control states. One of the channels behind this increase is the accompanying increase in firm employees by around 5%, output by 15% and welfare expenses per employee by 13%. Our results show that policies that increase firm growth, which in turn increase the provision of amenities valued by women (without employer backlash), are likely to increase female employment.